Survey: Liquidity and cashflow are key concerns for one third of businesses in a post-Covid economy

The announcement of more government-backed loans on the way is welcome. A recent survey by Chartered Accountants Ireland indicates liquidity and cashflow are key concerns for a third of businesses. There is a low bar for businesses to be considered for these loans. They have to have been negatively affected by Covid 19 by at least 15% reduction in turnover. AIB, Bank of Ireland and Ulster Bank have committed to the €2 billion scheme of which the government will be guaranteeing 80%.

Many business owners we speak with have not qualified for bank loans, yet liquidity and cash flow support is badly needed. Sometimes an urgent requirement has emerged. Funds are needed in a quick turnaround that’s more suited to a Fintech than a bank. Here are some of the primary alternative solutions that might work in these situations:

Peer to peer loans

Currently the lenders are increasing amounts that can be funded. In the early days of Covid 19 some of their funders had taken a pause which meant the P2P lenders were more reliant on their crowdfunders. The good news is that funders are returning and with increased confidence. You can expect to get an unsecured loan up to €300,000 for a term of up to 3 years. There is a return of a 5 year loan capped at €100,000.

Secured Loans

During Covid 19 businesses that have assets such as machines and vehicles or land & buildings could refinance them to release working capital. The credit teams have an easier time in approving a loan when they have collateral. Refinancing land & buildings can have some set fees that make it attractive for seeking hundreds of thousands of Euro but not for lower amounts. Whereas using machines & vehicles is less complicated and can be suited to tens of thousands of Euro.

Invoice Finance

As business in Ireland opens up more credit teams are more open to financing invoices owed by companies in your book of debtors. There are one-off, ad hoc and ongoing finance facilities available, with up to 95% of the debtor value funded. If there are any debtors that are considered too high-risk currently, they can be reassessed for funding at a later stage as Covid 19 stresses ease.

Trade Finance

During Covid 19 certain businesses involved in trade have picked up such as PPE and eCommerce businesses. Trade finance helps them finance their purchase orders with someone elses money, thereby keeping vital working capital in their business. If you are ordering product from China for example, often you need to pay 50% immediately and 50% on delivery. Your money can be tied up for weeks and trade finance can help with this.

Merchant Cash Advance

Businesses such as hotels, restaurants and retailers who take a lot of payments by card can get a fast loan based on the turnover on their merchant statements. It’s reasonable to expect, if you’re doing €100,000 turnover by card a month you might be able to get a €100,000 loan. The credit teams can easily top up a facility again if needs be. Merchant Cash Advance also works for eCommerce businesses using data from Stripe, PayPal, Shopify etc. There is now a lender on the market who finances B2C stock and digital advertising. They plug in to your analytics and make a loan offer using this data. They have been known to ramp up funding quickly based on performance.

There are many other loan options on the market and we’re happy to help get your finance quotes so you can get the best deal. Call us 7 days on 01 55 636 55 or use the web chat box in the bottom right corner of this page.

Quotes:

“The survey, conducted by Chartered Accountants Ireland among almost 2,000 members on the island of Ireland, also shows that liquidity and cashflow are key concerns for one third of businesses in a post-Covid economy.”

https://www.rte.ie/news/business/2020/0717/1153861-chartered-accountants-ireland/

“AIB, Bank of Ireland and Ulster Bank have committed to offering loans to small businesses under a €2 billion State guarantee scheme at costs that will be “significantly below” market rates, said Tánaiste Leo Varadkar.”

https://www.irishtimes.com/business/economy/state-guaranteed-sme-loans-to-be-below-market-rates-t%C3%A1naiste-says-1.4306439

Got A Property That Is Taking Too Long To Sell? New Bridging Loan Solution.

As a result of the Covid19 crisis many properties are taking longer to sell than was originally envisaged (this may unfortunately be a feature of the market for some time to come), and even when they do sell in some cases the deal may not close for an extended period. All of this can leave some sellers in difficulty as the cash was required to meet other costs, be it another property purchase or some other reason where the non-receipt of the expected cash within the envisaged time from the property sale causes a difficulty.

Our finance partners recognise these difficulties and have a product that will allow borrowers generate cash from properties at the time it is needed. These bridging loans are fast and flexible. Lending criteria are straightforward:

• Get up to 70% of the value of a property

• Get a loan from from 4 months to one year

• The property must be on the market through an estate agent and it must be advertised on the national property websites

• Commercial & residential rental property owned by a company is ideal but no private dwellings

• Amounts from €200k upwards make sense as there are set legal fees which can make it expensive for lower amounts

Talk to us about property backed bridging loans today on 01 55 636 55 or type us a message via the web chat box in the bottom right of this page.

Getting a Business Loan When The Bank is Not Helping

Most business owners I speak with have already tried their bank. Sometimes they have simply been declined because their business hit some difficulties and the accounts are not too strong or they are near the limit on their overdraft facility. Other times the bank is taking too long and they need a quicker turnaround than the situation they find themselves in.

So what can you do? Here are a couple of examples of recent clients that can shed some light on potential solutions.

Machinery Refinance

John is a farmer whose business suffered badly with the heatwave in 2018. This affected his accounts and cash flow and he was struggling to get a loan approved. He identified an opportunity to buy an excellent breed of cattle from Denmark at a knock down price. A heatwave there affected the price of feed badly resulting in a sell off and this bargain appearing. He needed to act quickly.

John wanted a €50,000 business loan. Over the years he had bought a lot of machinery. Some were fully paid off and others were still on finance but were mostly paid off. We discussed potential options and settled on a secured business loan as the way forward. He put together a list of vehicles and machines stating the manufacturers, models and years of manufacture as well as amounts of finance outstanding. The partner credit team assessed this and was able to propose a loan facility over 5 years secured on the assets. John was then able to draw down the loan and get on with his business initiative.

Card Machine Finance

Mary is a small hotel owner in the west of Ireland. It’s a family owned business that’s performing well after a quiet number of years. The hotel was badly in need of a renovation and this would in turn drive more profitability however, the bank had said they were at the limit of finance that could be extended to them and no unsecured business loan could be made to facilitate the renovation.

Mary required a €100,000 business loan to upgrade and refresh the hotel rooms. As a busy hotel it had a large volume of card transactions. Mary was able to provide 12 months merchant statements showing average turnover of over €100,000 a month. We decided that a merchant cash advance application was the best way forward to get the funds quickly and the renovation done in time for the busy season. Mary was able to get a loan facility that would be paid back over a year. It had a flexible repayment that suited her seasonal business. It works by taking a small daily percentage of the card machine income. That means when it’s busy you pay back more but when it’s a quiet time of year you pay back less. The percentage is set with the aim of repayment within the year. Mary was happy with this and was able to draw down the funds within days.

So that outlines a couple of past clients we could help. There are many other solutions that can fit your needs right now. We are here for you 7 days a week to talk finance. Call us on 015563655 now?